Fraud Profile Pertemuan XIII Matakuliah: F0184/Audit atas Kecurangan Tahun: 2007

Bina Nusantara Mahasiswa diharapkan mengetahui ciri-ciri umum atau keadaan dari seorang pelaku kecurangan Mahasiswa diharapkan mengetahui langkah-kangkah pengendalian internal untuk melakukan pencegahan terhadap timbulnya kasus kecurangan Learning Outcomes 3

Bina Nusantara Internal Environment Red Flag Detected Fraud in the Internal Environment Management and Corporate Fraud Top Management Fraud Lower Level of Fraud Outline Materi 4

Red Flag in the Internal Environment Economic reason from employee Internal organization conflict Low trust between top management Employee treatment by management The Company has a history of fraud internally Company put too much pressure to the employee Bina Nusantara

Detecting the Fraud Detecting fraud is a matter of acknowledging:  That fraud exists  That any organization can become either a victim of fraud or a perpetrator of fraud  That certain weakness in internal controls and human character can be conducive to fraud  That certain test of internal controls and tests of the organization’s motivational environment can provide some insight on the possibility of fraud in that environment  That the key of fraud auditing is training the mind set Bina Nusantara

Common Exceptions Transactions that are odd as to: –Time –Frequency –Places –Amount Internal controls that are unenforced or too often compromised by higher authorities Employee motivation, morale, and job satisfaction levels A corporate culture and reward system that support unethical behavior toward parties Bina Nusantara

Main Control Environment Consideration Integrity Ethical Value Competence of Entity’s People Management Philosophy Assignment of Authority and Responsibility Organization and Development of People Attention and Direction from Top Management Bina Nusantara

Telltale Signs Significant observed changes from the defrauder’s past behavior pattern Knowledge that the defrauder was undergoing emotional trauma in his life Knowledge that the defrauder had a very expensive social life or addict with gambling or drinking Knowledge that the defrauder was heavily in debt Audit findings deemed to be errors and irregularities that were considered immaterial at the time Knowledge that the company was having financial difficulties Bina Nusantara

Telltale Signs (Con’t) Knowledge that the company was having financial difficulties Knowledge that management was showing increasing signs of incompetence Substantial growth beyond the industry norm in regulated industries Bina Nusantara

Management Profile Tend to have highly material personal values Tend to treat people as objects not individual Are highly self centered Are often eccentric in the way they display their wealth Speak about their cunning achievement and winnings more than their losses Appear to be reckless or careless with facts and often enlarge on them Appear to be hardworking, almost compulsive, but most of their time at work is spent in scheming Bina Nusantara

Management Profile (Con’t) May gamble or drink a great deal Buy expensive gifts for their family Are hostile to people who oppose their views. They feel exempt from accountability and controls because of their position Create a great deal of turnover among their subordinates Play favorites among their subordinates, but the relationship can cool very quickly Manage by crisis more often that by objectives. They tend to drift with the times and have no long range plans Bina Nusantara

Management Profile (Con’t) Tend to override internal controls with impunity and argue forcefully for less formality in internal controls Demand absolute loyalty from subordinates, but they themselves are loyal only to their own self interests Have a few real friends within their own industry or company. Their competitors and colleagues often dislike them Bina Nusantara